Europe will benefit from Greece being given a fresh start

On January 22, 2015, the Financial Times have published a letter signed by eighteen economists, including Nobel Laureates Joseph Stiglitz and Chris Pissarides (GEfR founding member). The letter argues that Europe will benefit from Greece being given a fresh start. The authors start from the premise that Greece’s debt is clearly unsustainable and that an economy cannot grow out of recession and keep a reasonable growth path when it has to make repayments (mostly abroad) for a debt as large as Greece’s. They suggest ways of easing the burden of the debt without default and without any other reneging on Greece’s obligations to its lenders. Their suggestions include postponement of the debt until Greece’s growth rate rises to 3% and until Greece recovers half of its lost income; providing more resources for public investments; writing off parts of the debt after bilateral agreements with official lenders, and other similar suggestions.